EUR/USD Recovery Fails to Shift Downside Risks

The EUR/USD has seen some recovery after hitting fresh cyclical lows at 1.1215, but its risks remain skewed to the downside over the coming months.

According to Brown Brothers Harriman's Elias Haddad, support levels for EUR/USD are offered at 1.1200 and 1.1111, with the former being a double top formed in August-September 2024 and the latter representing a 50% retracement of the 2025-2026 uptrend.

The Eurozone's mixed September preliminary CPI inflation data saw headline numbers running hot but underlying measures tracking expectations.

Despite this, above-target Eurozone inflation and a firmer growth outlook give the ECB scope to deliver more hikes, with nearly 75bps of tightening implied in the next twelve months to reach a rate of 3.25%.